An Australian perspective on the distinction between financial and integrated reporting
04 Mar 2013
The Australian Financial Reporting Council (FRC) has released an updated paper exploring the interaction of financial reporting and integrated reporting. The paper concludes that in the FRC's view, integrated reporting is complimentary to, rather than a replacement for, financial reporting.
The paper, entitled What Do We Mean by the Term 'Financial Reporting', Especially in Relation to Integrated Reporting?, considers the concepts of 'financial reporting' and 'integrated reporting' in the Australian and broader concepts.
Firstly outlining the FRC's response to the International Integrated Reporting Council (IIRC) Discussion Paper on integrated reporting, the paper explains how terms such as 'financial reporting' and 'annual reporting' are commonly used interchangeably, before noting how the current Australian Accounting Standards Board (AASB) project on performance reporting goes beyond financial reporting and may "possibly coincide with aspects of integrated reporting".
The paper then explores how financial reporting is considered under International Financial Reporting Standards (IFRS), the Conceptual Framework and the Australian Corporations Act 2001.
Of particular interest is the following assessment of the 'place of integrated reporting':
The basic approaches to integrated reporting are either:-
- adding complementary information to that provided by the financial report (statements) to arrive at a holistic view of the entity, for example social, and environmental disclosures. Financial information used to give this holistic view would be sourced from and cross referenced to this financial report; or
- re-mastering all information provided in a single report that serves multiple purposes.
The FRC’s view is that (a) is the preferred approach for both conceptual and practical reasons. We believe the IIRC shares this view.
Click for access to the full FRC paper (link to FRC website).
